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Govt looks to make North East export hub for Bangladesh, Asean
The government is rapidly implementing a comprehensive strategy to make the landlocked northeastern region an export hub for markets in Bangladesh and the Association of Southeast Asian Nations
The government is rapidly implementing a comprehensive strategy to make the landlocked northeastern region an export hub for markets in Bangladesh and the Association of Southeast Asian Nations even as it negotiates a better free trade deal with the 10-nation Asean block, people familiar with the matter said on Wednesday.
The fourth round of talks on renegotiating the Asean-India Trade in Goods Agreement (AITIGA) is scheduled for May 7-9 in Kuala Lumpur and an improved deal is expected to be concluded by 2025, they said, adding the revised agreement will give a major boost to the economy of the northeastern states.
India is renegotiating several “adverse” provisions of the 2009 trade deal with Asean that opened the floodgates for low-quality, cheap Chinese goods, which were routed through the regional bloc, three officials said requesting anonymity.
“India will gain significantly once this historical error is corrected. The northeastern region, which currently has a negligible share in India’s total exports to Asean, could be its biggest beneficiary,” one official said. Out of India’s merchandise exports to Asean worth $44 billion in 2022-23, the northeast’s share was less than $10 million, he said.
The AITIGA was signed in August 2009 in Bangkok and came into force from January 2010. “The hastily signed FTA adversely impacted India, particularly because of its weak provisions for rules of origin, which led to massive dumping of Chinese goods via some Asean countries. It led to a massive trade deficit,” a second official said.
During 2022-23, India’s trade deficit with Asean was $43.6 billion, almost equal to its total exports during that period, while its imports were worth $87.58 billion, a 29% year-on-year jump. The 10 Asean members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
“The northeast is advantageously positioned to harness benefits of deals like AITIGA. Besides, it has the potential to become India’s manufacturing and exports hub for the entire region, including Bangladesh and Myanmar. The government is focused on developing the northeast and a major impetus in this direction will be seen after the polls,” a third official said. Results for the general elections are set to be announced on June 4.
The comprehensive strategy to develop the northeast, which is in the works, envisages identification of market requirements and policy support to produce goods and services for neighbouring markets, the people said. “The focus is on creating infrastructure such as special economic zones, warehouses, customs facilities and highways to connect Bangladesh and Asean countries,” the third official said.
“Highways and waterways linking major global markets with the landlocked northeast are a must to restore the old glory of these states. Before Partition in 1947, the northeast was well connected with the neighbouring region. Partition disrupted connectivity and left the region relatively inaccessible to most parts of the world,” he said.
The distance between Agartala and Kolkata, which was 350km through erstwhile East Bengal, increased to 1,645 km.
There has been buy-in from a key global player - Japan – in efforts to improve connectivity and infrastructure in the northeast. The Japanese envoy and India’s foreign secretary chair a unique body called the Act East Forum to drive these initiatives and Japan has invested more than ₹1,600 crore in the northeastern states, barring Arunachal Pradesh.
A majority of Japanese investments has gone into improving road and bridges and Tokyo has supplemented these efforts with similar initiatives in Bangladesh. Japan also wants to create a new industrial value chain that links the northeast with Matarbari sea port in Cox’s Bazar district of Bangladesh. Matabari port, for which the Japan International Cooperation Agency (JICA) extended loans worth $1.2 billion, is expected to become operational in 2027.
India shares borders with Bangladesh (1,880km), Myanmar (1,643km), Bhutan (516km) and Nepal (99km), which can be constructively used for mutual benefits, they said. “Industrialisation of the northeast will help it become a gateway for trade with Asia-Pacific countries,” the third official said.
The northeast comprises 8% of India’s geographical area and includes the states of Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, with about 3.8% of the total population, according to the 2011 census. According to the Economic Survey 2022-23, these states generated only 2.2% of India’s GDP in 2020-21, with the lion’s share coming from Assam.
